A recent Queensland Court of Appeal decision has delivered an important result for property developers, overturning a judgment of more than $6 million arising from the termination of an off-the-plan contract.

In CAV Gasworks Pty Ltd v JYP Jiang Pty Ltd [2026] QCA 221, the Court of Appeal held by a 2:1 majority that the developer had validly terminated the contract. At the centre of the dispute were two contractual termination provisions and the meaning of seemingly straightforward words used within them.

The first question was what it meant for the developer to “cannot give” a particular notice by the sunset date. Did this require it to be literally impossible to give the notice, or could it include circumstances where the developer was technically capable of issuing the notice but was not practically in a position to perform the settlement and completion obligations that would follow?

The second question concerned a separate provision allowing the developer to terminate if, “at any time”, it formed the opinion that the first termination provision “will apply”. Did “at any time” mean the developer could form that opinion and exercise the termination right even after the sunset period had expired? Or did the words “will apply” make the provision forward-looking, so that the opinion had to be formed before the relevant period expired?

These questions are particularly relevant for developers where titles may have issued, but construction or other contractual requirements remain outstanding.

More broadly, the decision is a useful reminder that contractual terms are not necessarily interpreted by looking at individual words in isolation. Expressions such as “cannot”, “at any time” and “will apply” must be considered in the context of the clause in which they appear, their interaction with other provisions of the contract and the commercial operation of the agreement as a whole.

For developers, the decision therefore highlights the importance of ensuring that an off-the-plan contract clearly reflects the intended commercial operation of its settlement, sunset and termination provisions at the time the contract is entered into, rather than leaving those questions to be resolved when a sunset date is approaching or a dispute has already arisen.

How did the dispute arise?

The dispute concerned the sale of two proposed lots in the Luminare development at Newstead, Brisbane.

The contract was entered into in June 2017 for a purchase price of $4.2 million, with a deposit of $420,000.

Two contractual termination provisions became central to the dispute:

• Clause 8.3 permitted either party to terminate if the seller “cannot give” the relevant notice within 5.5 years after the contract date, subject to an extension mechanism.
• Clause 13.1(c) provided the seller with a separate termination right if, “at any time”, it formed the opinion that clause 8.3 “will apply”.

The separate title requirements were satisfied before the relevant sunset date. However, the developer subsequently sought to terminate the contract and the purchaser challenged the validity of that termination.

The dispute therefore required the Court to consider not simply what individual words in those provisions meant, but how the termination provisions operated within the broader contractual framework and the commercial consequences that followed from giving the relevant notice.

The two grounds of appeal

The developer’s appeal raised two central issues.

Ground 1: What did “cannot give” mean?

The first ground concerned clause 8.3 and whether the developer could validly terminate because it “cannot give” the relevant notice within the contractual period.

The issue was whether those words required literal impossibility, or whether they also covered circumstances where the developer was not practically able to give the notice because doing so would trigger settlement and associated completion obligations that it could not yet perform.

Ground 2: Could the second termination provision be used after the sunset period?

The second ground concerned clause 13.1(c), which referred to the seller forming the opinion, “at any time”, that clause 8.3 “will apply”.

The issue was whether the clause could still be relied upon after the relevant sunset period had expired, or whether it operated only prospectively, before the deadline passed.

These two issues framed the different approaches taken by the primary judge and the three judges of appeal.

The primary judge: the termination was invalid

At first instance, Bowskill CJ concluded that the developer had not validly terminated the contract.

Her Honour adopted a relatively strict construction of “cannot”, concluding that it required an inability or impossibility to give the notice.

Because the separate title requirements had already been satisfied, the developer was capable of giving the notice, even though the contract permitted it to delay doing so until it was satisfied that its pre-settlement obligations could be completed within 14 days.

The financial consequences were substantial. The developer was ordered to pay the purchaser $6,097,841.42, including interest.

The primary judge also rejected the developer’s reliance on clause 13.1(c). Although the provision used the words “at any time”, her Honour concluded that it operated prospectively and could not be relied upon after the relevant period had expired.

The developer appealed.

The appeal: three judges, two approaches

The Court of Appeal divided 2:1 on Ground 1, concerning the meaning of “cannot give”. However, the judges agreed that Ground 2 did not provide the developer with an alternative basis for termination after the relevant period had expired.

Bradley JA: both grounds should be dismissed

Bradley JA agreed with the primary judge’s interpretation.

On Ground 1, his Honour considered that once the separate title requirements had been satisfied, the relevant termination right was no longer available.

Importantly, his Honour considered that if the parties intended “cannot” effectively to mean “need not”, they could have used those words.

His Honour also agreed that clause 13.1(c) operated prospectively and could not provide a basis for termination after the relevant period had expired.

Accordingly, Bradley JA would have dismissed both grounds of appeal.

Crow J: practical ability to settle mattered

Crow J reached a different conclusion on Ground 1.

His Honour considered that giving the relevant notice could not be treated as a purely administrative exercise. The notice had contractual consequences and moved the parties towards settlement, when the developer would be required to perform substantive completion obligations.

Accordingly, whether the developer “could” give the notice involved more than asking whether it was physically capable of sending it. The developer’s practical ability to perform the associated contractual obligations was also relevant.

His Honour concluded that the developer’s termination under clause 8.3 was effective and allowed Ground 1.

However, Crow J agreed with the primary judge that clause 13.1(c) operated prospectively. Ground 2 was therefore dismissed.

Hindman J: commercial reality was important

Hindman J also concluded that Ground 1 should be allowed.

Her Honour described the construction issue as “finely balanced”, but concluded that “cannot” was not limited to literal impossibility. Its meaning had to be determined in its contractual and commercial context.

Importantly, that conclusion did not give the developer an unrestricted termination right. Her Honour considered that the developer’s exercise of the relevant contractual satisfaction was subject to an implied requirement to act honestly and reasonably.

Although it was unnecessary for her Honour to determine Ground 2, Hindman J also considered that clause 13.1(c) operated prospectively and could not be relied upon after the relevant period had passed.

Why does this matter for developers?

The majority decision provides several useful lessons.

• First, practical ability may matter. The majority did not treat the developer’s physical ability to issue a notice as determinative. Where the notice triggers settlement obligations, whether the developer can actually perform those obligations may also be relevant.
• Second, this is not a general licence to terminate. The decision turned on the wording and interaction of the particular contractual provisions. Developers should not assume that all similarly described sunset provisions will operate in the same way.
• Third, timing matters. Despite the second termination provision containing the expression “at any time”, the Court considered the relevant part of the clause to operate prospectively. Developers should therefore obtain advice before a sunset date expires, rather than assume a termination right can be exercised afterwards.
• Finally, keep the evidence. Where a developer’s ability to complete is relevant, contemporaneous records of construction progress, certification, outstanding works and other settlement requirements may become important if the termination is later challenged.

Could the High Court have the final say?

Possibly.

What makes this decision particularly interesting is the division of judicial opinion. Her Honour Bowskill CJ at first instance and His Honour Bradley JA on appeal preferred the purchaser’s construction. His Honour Crow J and Her Honour Hindman J preferred the developer’s construction.

In other words, while the legally operative result is the 2:1 majority decision of the Court of Appeal, the four judges who have considered the central construction issue have divided 2:2 on the competing interpretations.

Any further appeal would require the relevant appellate process, including an application for special leave to the High Court. If the High Court ultimately considers the issue, a different outcome remains possible.

Developers with comparable contractual provisions should therefore be cautious about treating the decision as the final word on all similarly drafted sunset clauses.

The takeaway

For developers, the importance of CAV Gasworks lies in the Court of Appeal majority’s commercially focused approach to contractual interpretation.

The message is not that developers now have an easier way to exit off-the-plan contracts. Rather, whether a termination is valid may depend upon the precise contractual wording, the practical ability of the developer to perform its completion obligations, when the termination right is exercised and the evidence available to support the developer’s position.

For anyone approaching a sunset date, those issues are best considered before the deadline expires, not afterwards.

This article provides general information only and does not constitute legal advice. The operation of any sunset or termination provision will depend on the particular terms of the contract, applicable legislation and the circumstances of the development. Legal advice should be obtained before issuing or acting upon a termination notice.

If you are a developer approaching a sunset date, or would like to discuss how this decision may affect your contractual rights, contact Tracer Law or Sakshi Bhati, Senior Associate, on (07) 3184 3517 or at [email protected].